ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made by and
among DPI of Rochester,
LLC, a New York limited liability company with an address at
0000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000 ("Seller"); Xxxxx Xxxxxxx, an individual
residing in the State of New York (“Xxxxxxx”); Xxxxxxx Xxxxxxx, an individual
residing in the State of New York (“Xxxxxxx”); and Secuprint Inc., a New York
corporation with an address at 00 Xxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxx 00000 ("Buyer"), a subsidiary of Document Security Systems,
Inc. The Seller, Stanley, Kellman and the Buyer and are
collectively referred to as the “Parties” and individually as a
“Party.”
RECITALS:
I.
Seller is engaged in the business of commercial printing (the "Business");
and
II.
Seller desires to sell certain assets, properties and rights now owned and held
by it and used or usable in connection with the operation of the Business;
and
III. Buyer
desires to purchase certain Business assets, properties and rights of Seller
upon the terms and conditions hereinafter set forth, and to continue the
Business; and
IV. The
Parties acknowledge that Seller intends to file a voluntary petition for relief
(the “Bankruptcy Case”) under Chapter 11 of Title 11 of the United States Code,
11 U.S.C. §§101, et seq. (the “Bankruptcy Code”) in the United States Bankruptcy
Court for the Western District of New York (the “Bankruptcy
Court”).
X.
Xxxxxxx and Xxxxxxx (“Members”) are the only members of the Seller, and
execute this agreement only to confirm the representations, warranties and
covenants in Articles II and III, and to specifically indicate their assent to
the provisions of Paragraph 3.09 of this Agreement.
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual covenants hereinafter
contained, the Parties hereto agree as follows:
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ARTICLE
I
PURCHASE AND
SALE
1.01 Purchase of
Assets. On the Closing Date set forth in Article V, Seller
agrees to sell and Buyer agrees to purchase, subject to the terms and conditions
of this Agreement, the assets, properties and rights of Seller relating to the
Business (the "Assets"), free and clear of all liens, claims, charges, and
encumbrances of any kind or nature whatsoever except as provided herein, as
follows:
A. All
of Seller's inventory relating to the Business as the same shall exist on the
Closing Date and which is usable and saleable in the ordinary course of
business, including but not limited to the items listed and described on
Schedule 1.01A hereto;
B. All
of Seller's furniture, fixtures, machinery, equipment, tools, supplies and
leasehold improvements relating to the Business as the same shall exist on the
Closing Date, including but not limited to the items listed and described in
Schedule 1.01B hereto;
C. All
Seller’s personal property leases for equipment listed on Schedule 1.01C
attached hereto (the “Personal Property Leases”);
D. All
accounts receivable owned by Seller and existing as of the Closing Date;
and
E. All
of Seller's trademarks, tradenames (including "DPI"), goodwill, intangible
assets and records relating to the Business, including, but not limited to,
Seller's telephone numbers, internet addresses, websites, customer lists,
mailing lists, sales and purchasing correspondence and records, computer
software, data processing records and all of the operational books, records and
data used by Seller in connection with the Business, except as hereafter set
forth.
It is the intention of the parties
hereto that the Assets shall include all of Seller's assets, used or usable in
the conduct of the Business, whether or not specifically listed in the Schedules
attached hereto and made a part hereof; PROVIDED, however, that there is
specifically excluded from the Assets the items listed on Schedule
1.01C.
1.02 Liabilities. Except
as set forth in Schedule 1.02, it is expressly understood and agreed that Buyer
does not, nor will it assume or become liable for, any of Seller's liabilities
of any kind or nature at any time existing or asserted, whether fixed,
contingent or otherwise, including without limitation, accounts, notes and taxes
payable, workers compensation claims, liability claims, lease obligations
accrued prior to the Closing Date, salaries, wages, commissions, severance or
separation pay, or vacation, profit sharing, retirement, pension, bonus,
hospitalization, medical, health or other employee benefits or any unemployment
or other benefit taxes relating to any of Seller's employees.
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1.03 Purchase
Price. The aggregate purchase price to be paid by Buyer to
Seller for the Assets and the Covenant Not to Compete (the "Purchase Price")
shall be calculated as the lesser of: (A) the sum of: (i)
ninety percent (90%) of the value of Seller’s net (non-contra) accounts
receivable less than 90 days old (as adjusted pursuant to Paragraph 1.04); plus (ii) fifty
percent (50%) of the value of Seller’s inventory (as adjusted pursuant to
Paragraph 1.04); plus (iii) Fifty
Thousand Dollars ($50,000.00); or (B) One Million Dollars
($1,000,00.00). The Purchase Price shall be allocated to the various
portions of the Assets, and to the Covenants Not-To-Compete established by
Paragraph 3.09 hereof, as set forth in Schedule 1.03. Such allocation
shall be used by the parties for all tax purposes and filings, including without
limitation, IRS Form 8594.
1.04 Adjustment of Account
Receivables/Inventory. For the purposes of calculating the
Purchase Price pursuant to Paragraph 1.03, the actual value of the inventory on
the Closing Date shall be determined by a physical inventory conducted jointly
by Seller and Buyer following the close of business on the day preceding the
Closing Date, with each item of inventory to be valued at the lower of cost or
market. Similarly, net (non-contra) accounts receivable shall be
valued as reflected on the Seller’s books and records after properly crediting
all payments made against accounts receivable on the Closing Date.
1.05 Payment of Purchase
Price. The Purchase Price, net of offset under Section 1.06,
shall be paid at the Closing to Seller in the form of a wire transfer to an
account specified by Seller
1.06 Credit for DIP
Financing. Subject to the approval of the Bankruptcy Court, it
is anticipated that Buyer or an affiliate might provide financing to Seller, as
a debtor in possession (“DIP”), in connection with the Bankruptcy
Case. Buyer may, at its option, use part or all of any amounts due
from Seller pursuant to the terms of the DIP credit facilities extended to
Seller by Buyer or its affiliate to apply against or satisfy any of Buyer’s
obligations to pay the Purchase Price.
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ARTICLE
II
REPRESENTATIONS AND
WARRANTIES OF SELLER AND MEMBERS
Seller and the Members, to the best of
their knowledge, jointly and severally represent and warrant to Buyer as
follows:
2.01 Authority. Seller
is a limited liability company, duly organized, validly existing and in good
standing under the laws of the State of New York. Subject to the
authority of the Bankruptcy Court and any orders of such court in the Bankruptcy
Case (specifically including, without limitation, the Sale Order described in
Article 6), Seller has full power and authority to own the Assets, to carry on
the Business as currently conducted, to enter into this Agreement and to sell,
transfer and deliver the Assets. Subject to the authority of the
Bankruptcy Court and any orders in the Bankruptcy Case (specifically including,
without limitation, the Sale Order described in Article 6), Seller has taken all
such actions as may be necessary or advisable and proper to authorize this
Agreement, the execution and delivery thereof, the consummation of the
transactions contemplated hereby and the execution and delivery of each of the
documents required to be delivered hereunder.
2.02 Absence of
Restrictions. Except as specifically set forth in Schedule
2.03, and the Bankruptcy Case, Seller has made no other agreement with any other
party with respect to the sale or encumbrance of the Assets. Except
for the Bankruptcy Case and the consent of Seller's landlord with respect to the
negotiation of a new lease of the Business premises located at 0000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx (the “Business Premises”), the execution and
delivery of this Agreement, and the consummation of the transactions provided
hereunder, do not require any third party consent and do not violate, conflict
with, result in the breach of, or cause the acceleration of or default under any
provision of any obligation, mortgage, lien, lease, agreement, instrument, law,
order, arbitration award, judgment, decree or any other restriction to which
Seller is a party or by which Seller is subject or bound.
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2.03 Title to
Assets. Except as set forth in Schedule 2.03, Seller is in
possession of the Assets and has good, marketable and indefeasible title to all
of the Assets, free and clear of all liabilities, mortgages, conditional sales
agreements, security interests, leases, liens, pledges, encumbrances,
restrictions, charges, claims or imperfections of title whatsoever.
2.04 Condition of
Property. All of Seller's tangible personal property and
equipment included in the Assets in good working order so as to be fit for use
in the ordinary course of the Business.
2.05 Inventory. All
of Seller's inventory included in the Assets is located on the Business
Premises, is usable and saleable in the ordinary course of the Business and is
of a quality suitable for sale in the ordinary course of such
Business.
2.06 Contracts. Other
than the Bankruptcy Case, Seller has no contracts or commitments of any kind or
nature which would materially and adversely affect the Business, the Assets or
the continuation of the Business by Buyer.
2.07 Litigation and
Claims. Other than the Bankruptcy Case, there is no
litigation, proceeding, suit, action, controversy or claim in law or in equity
(including proceedings by or before any governmental board or agency) existing,
pending or, to the best of Seller's and Members' knowledge, threatened against
Seller which might materially adversely affect the Business or the Assets, and
there is no fact known to Seller and Members which could form the basis for any
such litigation, proceeding, suit, action, controversy or
claim. Seller has complied with all laws, regulations and orders
applicable to the Business, specifically including all orders of the Bankruptcy
Court, all applicable zoning and environmental regulations and
orders. Other than the Bankruptcy Case, there are no judgments,
orders, or notices, whether or not filed, against Seller which might materially
adversely affect the Assets and the continuation of the Business as now
conducted by Seller.
2.08 Taxes. Except
as set forth in Schedule 2.08, Seller has filed returns for and paid in full all
of its federal, state and local taxes, including New York State sales and
franchise taxes, to the extent such filings and payments are required or due
prior to the date of this Agreement. All such returns were true and
correct when filed.
2.09 Environmental
Compliance. At all times in the conduct of the Business,
Seller has complied in all material respects with all environmental laws and
regulations, including, but not limited to, those laws and regulations relating
to the use, storage, transport, and disposal of any hazardous substances, wastes
or other materials and any related documentation, labeling or
records.
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2.10 Financial
Statements. The reviewed financial statements of the Seller
as, at and for the periods ended December 31, 2006, December 31, 2007, and
September 30, 2008, annexed hereto as Schedule 3.05, (a) are in accordance with
the books and records of the Seller (b) present fully, fairly and accurately the
consolidated financial position of the Seller as of said dates and the
operational results of the Seller for the periods represented thereby and (c)
have been prepared in accordance with GAAP. Such financial statements
set forth all of the liabilities and obligations of the Seller, direct and
indirect, contingent and accrued, of any nature whatsoever, whether arising out
of contract, tort, statute or otherwise, except: (a) where not required to be
included in such financial statements pursuant to GAAP, (b) liabilities and
obligations set forth in the contracts, leases and commitments listed and
described in the attached Schedules, and (c) liabilities and obligations
incurred in the ordinary course of the Business subsequent to the respective
dates thereof.
2.11 Labor
Relations. Except as set forth in Schedule 2.11(a) hereto, the
Seller has complied in all material respects with all applicable agreements,
laws, rules and regulations relating to the employment of labor, including those
related to wages, hours and payroll taxes. The Seller has withheld
and remitted to the proper Governmental Authorities all amounts required by law
or agreement to be withheld from wages or salaries of its employees and is not
liable for any arrearage of wages or any taxes or penalties for failure to
comply with any of the foregoing. The Seller has no labor
troubles in the sense that within the last 12 months there have been no strikes,
work stoppages, slowdowns, threatened unfair labor practice charges or other
material controversies pending or threatened by any of its employees; and the
Seller has not entered into any collective bargaining agreement and no union
represents, or in the past twelve (12) months has demanded or requested to
represent or is currently attempting to represent, any of the employees of the
Seller. Except as set forth in Schedule 2.11(b)
hereto, the Seller has not promulgated any policy or entered into any
agreement relating to the payment of any medical insurance premium, retirement
pay, severance pay, vacation pay or sick leave to any present or former
employees of the Seller. Schedule 2.11(b) will reflect all
vacation accrued as of the Closing and set forth the names of any employees of
the Seller who are currently on a leave of absence for any reason including
military duty, sickness, injury or disability and the reasons for and other
details of such leave(s). All of the employees of the Seller and
their current wage rates, none of which has been increased in the past thirty
(30) days, are listed in Schedule 2.11(b). True, correct and complete
copies of all written employment policies and all employee manuals which are
still in effect for any present or former employee of the Seller have heretofore
been delivered to Buyer.
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2.12 ERISA
Matters. Seller does not maintain or contribute to any
"employee benefit plans" as defined in Paragraph 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (including any "multiemployer
plans" as defined in Paragraph 3(37) of ERISA), or any other material bonus,
deferred compensation or other fringe benefits plan or arrangement for the
benefit of employees of Seller which are subject to the minimum funding
standards contained in Section 302 of ERISA. Set forth on Schedule
2.12 is a list and description of each bonus, deferred compensation or other
fringe benefit plan or arrangement for the benefit of employees of
Seller.
2.13 Accounts
Receivable. All of the Accounts Receivable owned by Seller and
existing as of Closing: (a) arose in the ordinary course of Seller's
business; and (b) to the best of Seller’s and Members’ information as of the
date of this Agreement, will be free and clear of all defenses and claims,
including claims of offset, of any nature whatever,
2.14 General
Warranty. No representation or warranty contained in this
Agreement, nor any Schedule, statement or certificate furnished to or to be
furnished by Seller to Buyer pursuant to the terms hereof, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or fails or will fail to state a material fact
necessary to make the statements contained or incorporated therein or herein not
misleading.
ARTICLE
III
COVENANTS OF SELLER AND
MEMBERS
Seller and the Members jointly and
severally covenant and agree as follows:
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3.01 Conduct of the
Business. Except as required in connection with the Bankruptcy
Case, to conduct the Business pending the Closing in the normal and usual manner
consistent with the successful operation thereof and, without the prior approval
of Buyer, not to make any change in the policies affecting the operation and
conduct of the Business nor to commence negotiations for, or enter into, any
material or unusual contracts or agreements affecting the Business or the
Assets, or extending beyond the Closing.
3.02 Retention of
Business. To use and exert best efforts between the date
hereof and Closing to keep and retain the Business as a going business for the
benefit of Buyer and to provide such assistance and cooperation as may be
reasonably requested by Buyer as necessary to assure the orderly transfer of the
Business to Buyer and the continuation thereof by Buyer subsequent to the
Closing.
3.03 Changes. Between
the date hereof and the Closing, to notify Buyer of any unusual changes,
problems or developments with respect to the Business and the status of Seller's
liabilities, obligations and relationship with its creditors, customers and
suppliers, to endeavor to obtain an uninterrupted and efficient transfer of the
ownership of the Business.
3.04 Liabilities. To
the extent authorized by the Bankruptcy Court, to pay and discharge, or to make
adequate provision satisfactory to Buyer for the payment and discharge of, all
of Seller's liabilities, indebtedness, obligations, claims and losses arising
out of, or by reason of, the operation of the Business prior to the Closing
Date.
3.05 Access. To
allow the authorized personnel and agents of Buyer, upon reasonable notice,
access to any and all of the records and premises of Seller concerning the
Business at reasonable times as agreed to by the Parties between the date hereof
and the Closing; and to furnish Buyer with all information concerning Seller's
affairs as the same pertain to the Business as Buyer may reasonably request; and
to permit Buyer to make extracts from, and copies of, all of Seller's tax
returns and related canceled checks, books, records, appraisals, files, purchase
orders, sales orders and other records as the same pertain to the
Business.
3.06 Indemnification.
A. The
Members shall jointly and severally fully indemnify and hold harmless Buyer, its
officers, directors, agents, employees, advisors, successors and assigns, as
applicable, from and against and in respect of any and all liabilities,
obligations, damages, losses and expenses, including claims of every kind and
nature, whether accrued, absolute, contingent or otherwise, and reasonable
attorneys' fees and the costs of defense, incurred by any of them as a result
(the “Buyer’s Losses”), or by reason, of the breach, falsity or failure of any
of Seller's representations, warranties, covenants or undertakings contained in
this Agreement; it being agreed by the Parties hereto that the provisions of
this indemnification shall survive the Closing Date for a period of five (5)
years. In particular, this indemnity shall include any claim against
or losses or damages Buyer may suffer as a result of any violation by Seller of
any environmental laws or regulations, failure to pay any taxes or related
interest or penalties, or Seller's failure to satisfy any claims of
creditors.
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Notwithstanding any provision of this
Section 3.06A, the Seller or any Member will have no liability
(indemnification or otherwise) with respect to an inaccuracy or breach of any
representation, warranty or covenant set forth in this Agreement or any exhibit,
schedule or certificate until the Buyer’s Losses shall exceed $10,000 in the
aggregate (the “Seller’s Basket”) and then the Seller and the Members shall have
liability only for such amount in excess of the Seller’s Basket. In
no event shall the aggregate liability of the Seller or Members with respect to
any Buyer’s Losses exceed $100,000.
B. The
Buyer shall fully indemnify and hold harmless the Seller and its
Members or employees, as applicable, from and against and in respect of any
liabilities, obligations, damages, losses and expenses, including claims of
every kind and nature, whether accrued, absolute, contingent or otherwise, and
reasonable attorneys’ fees and the costs of defense, incurred by any of them as
a result, or by reason of the breach, falsity or failure of any of Buyer’s
representations, warranties, covenants or undertakings contained in this
Agreement (“the Seller’s Losses”); it being agreed by the Parties hereto that
the provisions of this indemnification shall survive the Closing Date for a
period of five (5) years.
Notwithstanding any provision of this
Section 3.06B, the Buyer will have no liability (indemnification or
otherwise) with respect to an inaccuracy or breach of any representation,
warranty or covenant set forth in this Agreement or any exhibit, schedule or
certificate until the Seller’s Losses shall exceed $10,000 in the aggregate (the
“Buyer’s Basket”) and then the Buyer shall have liability only for such amount
in excess of the Buyer’s Basket. In no event shall the aggregate
liability of the Buyer with respect to any Seller’s Losses exceed
$100,000. Further, in no event shall this indemnification extend to
any members’ liability under any equipment lease guaranty, mortgage guaranty, or
other monetary obligation of the Members.
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3.07 Cooperation. To
execute, acknowledge and deliver to Buyer on demand, both prior and subsequent
to the Closing, all such instruments, consents, authorizations, certifications,
books, records and data, and to take all other action, as previously agreed or
as may be reasonably necessary or advisable in the opinion of
Buyer: (i) to satisfy the Conditions to Closing contained in Article
V hereof, (ii) to effect the provisions and intent of this Agreement, or (iii)
to facilitate the transfer and conveyance of title to and possession of the
Assets to Buyer; and further to assist and cooperate with Buyer in connection
with any litigation or other claims of third parties involving the Business or
the Assets.
3.08 Sales Tax
Notification. To cooperate with Buyer in its preparation and
filing of form AU-196.10 with the Sales Tax Bureau of the New York State
Department of Taxation and Finance.
3.09 Non-competition. For
a period of five (5) years from and after the Closing Date, Seller and Members
each hereby severally agrees not to engage or compete, directly or indirectly,
as a principal, on his/her/its own account, or as a shareholder, member,
officer, director, employee, consultant, advisor, partner or joint venturer in
any corporation or other business entity, as the case may be, in any business
engaged in the sale, distribution or provision of products or services
previously sold, distributed or provided by Seller with respect to the Business,
or which is otherwise in competition with the Business, in the geographical area
in Seller’s products were distributed. If any of these restrictions
on post-closing competitive activities contained in this Paragraph shall for any
reason be held by a court of competent jurisdiction to be excessively broad as
to duration, geographical scope, activity or subject, such restrictions shall be
construed so as to be limited or reduced to be enforceable to the extent
compatible with the applicable law as it shall then appear; it being understood
that by the execution of this Agreement the parties hereto regard the
restrictions herein as reasonable and compatible with their respective
rights.
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ARTICLE
IV
REPRESENTATIONS AND
WARRANTIES OF BUYER
Buyer represents and warrants to the
Seller and Members as follows:
4.01 Corporate
Standing. Buyer is a business entity duly organized, validly
existing and in good standing under the laws of the State of New
York. Buyer has full corporate power and authority to own its
properties and to carry on its business as currently conducted.
4.02 Corporate
Authority. Buyer has full corporate power and authority to
enter into this Agreement and to purchase the Assets. Buyer has taken
all such corporate action as may be necessary or advisable and proper to
authorize this Agreement, the execution and delivery thereof, the consummation
of the transactions contemplated hereby and the execution and delivery of each
of the documents required to be delivered hereunder, so that Buyer will have
full right, power and authority to purchase the Assets from the Seller and to
perform all of its obligations under this Agreement at the Closing.
4.03 Consents. Neither
the execution of this Agreement nor the consummation of the transactions
contemplated hereby on the part of Buyer requires the consent of any third
party.
ARTICLE
V
CLOSING
Closing (the “Closing”) shall take
place at the offices of Xxxxxxxxx & Xxxxxxx LLP, 000 Xxxxxx & Xxxx
Xxxxx, Xxxxxxxxx, Xxx Xxxx within 10 days of the last date upon which the Sale
Order and/or Assignment Order required pursuant to Article 6 of this Agreement
shall become Final Orders, as defined in Paragraph 6.03 of this Agreement (“the
Closing Date”).
ARTICLE
VI
BANKRUPTCY CONDITIONS TO
CLOSING
Seller has advised Buyer, and Buyer
acknowledges that Seller has advised it, that Seller is contemplating and is
expected to seek protection from its creditors under the Bankruptcy
Code. This Agreement, and the obligations of each party performed
hereunder, shall be subject to the fulfillment or wavier of each of the
following conditions (any one or more of which may be waived in writing in whole
or in part by the written consent of Seller and Buyer, as the case may
be):
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6.01 Seller
obtaining an order from the Bankruptcy Court in a form reasonably satisfactory
to Seller and Buyer which shall have been entered upon appropriate notice to
appropriate parties in interest entitled thereto, in the Bankruptcy Case (“the
Sale Order”): (i) approving this Agreement and the transaction contemplated
hereby; (ii) authorizing Seller to transfer and assign to Buyer all of its
rights, title and interest in and to the Assets under Section 363 of
the Bankruptcy Code, free and clear of any mortgage, pledge, claim, lien,
charge, encumbrances or security interests with such mortgage, pledge, claims,
liens, charges, encumbrances and security interests, if any, to attach to the
proceeds of the sale with the same validity, priority, enforceability and to the
same extent as such liens previously attached to the Assets; (iii) all of the
requirements of Section 363 of the Bankruptcy Code have been satisfied; (iv)
notice of the hearing on the transactions completed by this Agreement (1) was
given in accordance with the applicable provisions of the Bankruptcy Code ad the
Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and (2)
constitutes such notice as is appropriate under the particular circumstances and
in accordance with the Bankruptcy Code and applicable law; (v) finding that the
Buyer is a “good faith” purchaser as that term is used in Section 363(m) of the
Bankruptcy Code; and (vi) provisions for the Bankruptcy Court’s retention of
jurisdiction over matters arising out of or related to this Agreement and the
transactions contemplated hereby. Buyer shall have a reasonable
opportunity to review and approve any proposed Sale Order prior to its
submission to the Bankruptcy Court.
6.02 As
to the assigned Executory Contract(s) (as defined in Schedule 6.02 attached
hereto), Seller obtaining entry of an order (the “Assignment Order”) of the
Bankruptcy Court (which order may also be the Sale Order), in form reasonably
acceptable to Seller and Buyer, on notice other parties to such agreement(s) and
subject to the consent of such other parties if necessary, authorizing and
providing for (a) the assumption of the assigned Executory Contract(s) by the
Seller; and (b) the valid assignment of the assigned Executory Contract(s) to
Buyer. Buyer shall be responsible for satisfying the conditions of
Section 365(b)(1)(A) – (C) of the Bankruptcy Code to the extent necessary to
permit the assumption by Seller and the assignment to Buyer of the assigned
Executory Contract(s) (all such obligations, including without limitation any
payments required to be made, the “Cure Obligations”). Buyer shall
have a reasonable opportunity to review and approve any proposed Assignment
Order prior to its submission to the Bankruptcy Court.
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6.03 The
Sale Order and the Assignment Order shall have become a Final Order (as defined
in this paragraph); provided, however, that this
condition may be waived in writing by the parties. “Final Order”
shall mean an order or judgment of the Bankruptcy Court (a) which is not the
subject of a pending appeal, petition for certiorari, or other proceeding for
review, rehearing or reargument accompanied by a stay of the transactions
contemplated hereby, (b) which has not been reversed, stayed, modified, or
amended and (c) respecting which the time to appeal from or petition for
certiorari or to seek review, rehearing or reargument of such order shall have
expired, as a result of which such order shall have become final in accordance
with Rule 8002 of the Bankruptcy Rules and other applicable law, and there shall
not be in effect any preliminary or permanent injunction, stay or order, or
decree or ruling, by a court of competent jurisdiction or by a governmental
regulatory or administrative agency preventing performance of the transactions
contemplated by this Agreement.
6.04 In
the absence of such Sale Order and the Assignment Order, this Agreement shall be
deemed null and void and neither Party shall have any claim against the other by
virtue of this Agreement; provided, however that the
Buyer shall be entitled to a break-up fee in the amount of One Hundred
Twenty-five Thousand Dollars ($125,000.00) if, prior to the termination of the
Agreement in accordance with its terms, the Bankruptcy Court approves an
Alternative Transaction (as defined in this paragraph) and such Alternative
Transaction is consummated; provided further, however, that the
Seller’s obligation to pay such break-up fee, and the amount of such break-up
fee, are subject to the Bankruptcy Court’s approval. For the purposes
of this Agreement, an “Alternative Transaction” shall mean any one of the
following transactions with or by any person or group other than the
Buyer: (a) a merger, consolidation or similar transaction involving
the Seller, or (b) a sale, lease or other disposition directly or indirectly by
merger, consolidation tender offer, share exchange or otherwise of some or all
of the Assets.
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ARTICLE
VII
OTHER CONDITIONS OF CLOSING
BY BUYER
The obligation of Buyer to consummate
the transactions contemplated by this Agreement shall be subject, at Buyer's
sole discretion, to the satisfaction of the following conditions
precedent:
7.01 Representations. All
of the representations and warranties of Seller herein contained shall be true
and correct as of the date of this Agreement, and as of the Closing Date as if
expressly made on and as of the Closing Date.
7.02 Performance of
Covenants. All of the covenants to be performed and all of the
conditions to be satisfied by Seller prior to the Closing Date shall have been
performed or satisfied on or before the Closing.
7.03 Books and
Records. Seller shall have delivered to Buyer on or before the
Closing Date all of Seller's operational books, records, data and materials used
by Seller in the conduct of the Business which are or would be necessary or
useful to Buyer in the continuation thereof.
7.04 Condition of
Property. All of the Assets shall be in the same condition on
the Closing Date as the same are as of the date hereof, ordinary wear and tear
alone excepted.
7.05 Employment of
Members. Buyer shall have entered into employment agreements
with both Xxxxxxx and Xxxxxxx, on terms acceptable to Buyer which shall include
those set forth in Schedule 7.05.
7.06 Lease for Business
Premises. Buyer and Seller’s landlord shall have entered into
a lease for the Business Premises. Said lease shall be upon such
terms as are acceptable to Buyer, but shall include: (i) an initial term of five
(5) years; (ii) a five (5) year option to renew, exercisable by Buyer; (iii) an
option to purchase the real property during the term or any renewal of the lease
for fair market value, so long as the landlord has not sold the property to a
bona fide arm’s length purchaser; (iv) a right of first refusal to purchase the
property during the term of the lease, or any renewal thereof, on the same terms
as contained in any bona fide arm’s length offer to purchase received by the
landlord, provided, however, that Buyer’s
exercise of that right of first refusal shall require Buyer to pay landlord
Twenty-five Thousand Dollars ($25,000) more than said bona fide arm’s length
offer (Buyer’s failure to exercise the right of first refusal within thirty (3)
days of notice of a bona fide offer shall terminate Buyer’s option to purchase
upon the closing of landlord’s sale of the property to another party); and (v)
the rent payable under such lease shall be “triple net,” with an annual base
rent of $80,000 (payable in monthly installments) for the first year, and shall
increase by five percent (5%) per year during the term or any renewal
thereof.
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7.07 Additional
Contingencies. This Agreement is contingent upon (i) Buyer’s
obtaining a commitment for financing in an amount and upon terms satisfactory to
Buyer in its sole discretion; and (ii) Buyer's obtaining any required
governmental permits, approvals or consents relating to the operation of the
Business.
7.08 Delivery of
Documents. Buyer shall have received all such documents,
certificates, opinions and papers required of Seller pursuant to the terms of
this Agreement, or which shall have been reasonably requested by Buyer in
connection therewith, in form and substance as approved prior to the Closing by
Xxxxxxxxx & Xxxxxxx LLP, attorneys for Buyer, including but not limited to
the following:
A. A duly executed
warranty Xxxx of Sale to the Assets.
B. A new lease
for the Business Premises has been executed and received by Buyer.
C. A certified
copy of the Sale Order and Assignment Order, accompanied by a certification by
Seller’s counsel that they constitute Final Orders as herein
defined.
D. A
certificate jointly from Seller and Members dated as of the Closing Date, to the
effect that, as of the Closing Date, all of the representations and warranties
of Seller contained in this Agreement and the Schedules hereto are true and
correct and that all of the covenants and conditions contained in this Agreement
to be performed or satisfied by Seller prior to the Closing have been performed
or satisfied.
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ARTICLE
VIII
OTHER CONDITIONS OF CLOSING
BY SELLER
The obligation of Seller to consummate
the transactions contemplated by this Agreement shall be subject, at Seller’s
sole option, to the satisfaction of the following conditions
precedent:
8.01 Representations. All
of the representations and warranties of Buyer herein contained shall be true
and correct as of the date of this Agreement, and as of the Closing Date as if
made on and as of the Closing Date.
8.02 Covenants and
Conditions. All of the covenants to be performed and all of
the conditions to be satisfied by Buyer prior to the Closing Date shall have
been performed or satisfied on or before the Closing.
8.03 Members’ Equipment Lease
Guarantees. The lessors on any and all Personal Property
Leases assigned to Buyer shall have released any guarantees by which the Members
secured payment of such leases by the Seller.
8.04 Deliveries. Seller
shall have received all such documents, payments, certificates, notes,
instruments, opinions and papers required of Buyer pursuant to the terms of this
Agreement, in form and substance as approved prior to the Closing by
Seller's Attorney, including expressly, but not limited to, the
following:
A. Payment of
the Purchase Price to the extent and in the manner set forth in Paragraph 1.05
hereof.
B. A
certificate of resolutions adopted by Buyer's Board of Directors or Executive
Committee thereof authorizing the execution of this Agreement, the consummation
of the transactions contemplated hereby and the execution and delivery of the
documents required to be delivered hereunder, appropriately certified by Buyer's
corporate Secretary.
C. A
certificate of Buyer, dated as of the Closing Date, to the effect that, as of
the Closing Date, all of the representations and warranties of Buyer contained
in this Agreement are true and correct and that all of the covenants and
conditions contained in this Agreement to be performed or met by Buyer prior to
Closing have been performed or met, such certificate to be executed by Buyer's
President.
D. Bankruptcy
Court approval of this Agreement.
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ARTICLE
IX
CONTINGENT FINANCIAL
MATTERS
9.01 Tax Status and
Effect. It is understood and agreed that neither Seller nor
Buyer has made any representations to the other as to the tax status or tax
effect of the transactions contemplated by this Agreement, and each of the
Parties hereto is therefore separately taking counsel as to such matters and
each is assuming, subject only to the express and specific provisions of this
Agreement, the tax, if any, which may be incurred by reason of the carrying out
of the terms and provisions hereof.
9.02 Sales or Use
Tax. In the event that any sales or use tax shall be due to
any state or local governmental authority by reason of the sale of the Assets,
such tax shall be borne by Buyer; provided, however,
that Seller shall be solely responsible for any sales taxes arising out of the
operation of the Business prior to Closing.
9.03 Brokerage
Commissions. Seller and Buyer represent and warrant, each to
the other, that this Agreement and the transactions contemplated hereunder were
brought about without the assistance of any broker, person or firm, and that no
one is entitled to a commission, fee or payment of any kind relative to this
Agreement or the transactions contemplated hereby.
9.04 Risk of
Loss. All risk of loss to the Assets shall remain on Seller
until completion of the Closing.
9.05 Expenses of
Parties. All expenses involved in the preparation,
authorization and consummation of this Agreement, including, without limitation,
all fees and expenses of agents, representatives, counsel and accountants, shall
be borne solely by the Party which shall have incurred the same, and the other
Parties shall have no liability with respect thereto.
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ARTICLE
X
TERMINATION
This
Agreement may be terminated, and the transactions contemplated hereby may be
abandoned, by written notice promptly given to the other parties hereto, at any
time prior to the Closing Date:
10.01 By
mutual written consent of the Seller and Buyer;
10.02 By
either Seller or Buyer if any permanent injunction or other order of a court or
competent authority or governmental agency which prevents the consummation of
the transaction shall have become final and not appealable;
10.03 By
either Seller or Buyer upon ten (10) days written notice of such termination to
the other parties, if the Closing shall not have occurred on or prior to
__________;
provided that the failure of the Closing to occur by such date is not due
in whole or in part to a material breach of the terminating party of such
party’s representations, warranties or covenants under this
Agreement;
10.04 By
either Seller or Buyer if either (A) the Sale Order or the Assignment Order is
not entered by _______; or (B) the Sale Order or the Assignment Order is not a
Final Order by ________ (or if the Sale Order or the Assignment Order was
entered in the ten (10) days prior to such date and no appeal has been
perfected, eleven (11) days after the date of the Sale Order or Assignment Order
was entered; or (C) the Bankruptcy Court shall have denied the Sale order or the
Assignment Order;
10.05 By
either Seller or Buyer if the Closing has not occurred by the date which is
thirty days after the last to occur of the date of the Sale Order and the date
of the Assignment Order;
10.06 Automatically,
without further action by either Party, if the Bankruptcy Court approves an
Alternative Transaction, as defined in Paragraph 6.04;
10.07 By
Buyer if there has been a breach by Seller of any of its representations,
warranties or covenants that would result in the condition set forth in Article
VII not being met, which breach is not curable, or if curable, is not cured
within thirty (30) days after notice of such breach is given by Buyer to Seller;
or by Seller if there has been a breach by Buyer of any of its representations,
warranties or covenants that would result in the condition set forth in Article
VIII not being met, which breach is not curable, or if curable, is not cured
within thirty (30) days after notice of such breach is given by Seller to
Buyer.
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ARTICLE
XI
MISCELLANEOUS
PROVISIONS
11.01 Survival of Representations
and Warranties. All representations and warranties of the
Seller and the Members contained in this Agreement shall survive the execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the transfer and conveyance of the
Assets.
11.02 Buyer's
Liability. It is understood and agreed that all of Buyer's
obligations and responsibilities hereunder are solely those of Secuprint Inc.,
and that Document Security Systems, Inc., has, and shall have, no personal
liability with respect thereto.
11.03 Binding Effect;
Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective personal representatives,
successors and assigns.
11.04 Entire
Agreement. This Agreement contains the entire understanding
and agreement among the Parties hereto and supersedes any prior understandings,
memoranda or other written or oral agreements between or among any of them
respecting the within subject matter. There are no representations,
agreements, arrangements or understandings, oral or written, between or among
any of the Parties relating to the subject matter of this Agreement which are
not fully expressed herein.
11.05 Modifications;
Waiver. No modification or waiver of this Agreement or any
part hereof shall be valid or effective unless in writing and signed by the
Party or Parties sought to be charged therewith, no waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other
subsequent breach or condition, whether of like or different nature, and no
waiver of any breach of this Agreement by any Members shall be deemed to be a
waiver of any other Members for the same breach or any subsequent breach,
whether of like or different nature. No course of dealing between or
among any of the Parties hereto will be deemed effective to modify, amend or
discharge any part of this Agreement or the rights or obligations of any Party
hereunder.
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11.06 Partial
Invalidity. If any provision of this Agreement shall be held
by a court of competent jurisdiction to be invalid or unenforceable, such
provision shall be construed so as to be limited or reduced to be enforceable to
the maximum extent compatible with the law as it shall then
appear. The total invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
11.07 No Third Party
Beneficiary. None of the provisions of this Agreement shall be
for the benefit of, or enforceable by, any person or entity which is not a Party
hereto.
11.08 Notices. Any
notice or other communication required or permitted under this Agreement shall
be in writing and shall be deemed to have been duly given (i) upon hand
delivery, or (ii) on the third day following delivery to the U.S. Postal Service
as certified or registered mail, return receipt requested and postage prepaid,
or (iii) on the first day following delivery to a nationally recognized United
States overnight courier service, fee prepaid, return receipt or other
confirmation of delivery requested or (iv) when telecopied or sent by facsimile
transmission if an additional notice is also given under (i), (ii) or (iii)
above within three days thereafter. Any such notice or communication
shall be directed to a Party at its address set forth below or at such other
address as may be designated by a party in a notice given to all other Parties
hereto in accordance with the provisions of this Paragraph.
|
Notice
to Buyer shall
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Secuprint,
Inc.
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be
shall be sent to:
|
00
Xxxx Xxxx Xxxxxx
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Xxxxxxxxx,
Xxx Xxxx 00000
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|
|
Attn.: Xxxxxxx
Xxxxx
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with
a copy to:
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Xxxxxxxxx
& Xxxxxxx LLP
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000
Xxxxxx & Xxxx Xxxxx
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|
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Xxxxxxxxx,
Xxx Xxxx 00000
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|
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Attn: Xxxxxxx
X. Xxxxx
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|
Notice
to Seller
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DPI
of Rochester, Inc.
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shall
be sent to:
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0000
Xxxxxxx Xxxxxx
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Xxxxxxxxx,
Xxx Xxxx 00000
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|
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Attn.: Xxxxx
Xxxxxxx
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Xxxx
Xxxxxx, LLP
|
|
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000
Xxxx Xxxx Xxxxxx
|
|
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Xxxxxxxxx,
Xxx Xxxx 00000
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|
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Attn.: Xxxxx
X. XxxXxxxxx
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11.09 Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York pertaining to contracts made
and to be wholly performed within such state, without taking into account
conflicts of laws principles.
11.10 Jurisdiction and
Venue. DURING THE PENDENCY OF THE BANKRUPTCY CASE, THE
BANKRUPTCY COURT WILL HAVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN OR
AMONG THE PARTIES, WHETHER IN LAW OR IN EQUITY, ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY AGREEMENT CONPTEMPLATED HEREBY; PROVIDED, HOWEVER, THAT IF
THE BANKRUPTCY COURT IS UNWILLING OR UNABLE TO HEAR SUCH DISPUTE:
(i) the courts
of the State of New York and/or the United States Federal Courts located in the
State of New York shall have exclusive jurisdiction over each of the Parties and
such proceedings; and
(ii) the venue
of any such action shall be in Monroe County, New York and/or the United States
District Court for the Western District of New York.
11.11 Headings. The
headings contained in this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
11.12 Gender. Whenever
the context may require, any pronoun used herein shall include the corresponding
masculine, feminine or neuter forms and the singular of nouns, pronouns and
verbs shall include the plural and vice versa.
11.13 Fair
Meaning. This Agreement shall be construed according to its
fair meaning, the language used shall be deemed the language chosen by the
Parties hereto to express their mutual intent, and no presumption or rule of
strict construction should be applied against any Party hereto.
11.14 Counterparts. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of said counterparts shall together constitute but one and
the same instrument which may be sufficiently evidenced by one
counterpart.
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IN WITNESS WHEREOF, the Parties
hereunto have duly executed this Agreement on November 6, 2008.
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BUYER:
SECUPRINT,
INC.
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|||
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By:
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/s/
Xxxxxxx Xxxxx
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Xxxxxxx
Xxxxx, President
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|||
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SELLER:
DPI OF ROCHESTER,
INC.
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|||
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By:
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/s/
Xxxxx Xxxxxxx
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||
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Xxxxx
Xxxxxxx, President
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|||
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XXXXX
X. XXXXXXX:
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||
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/s/
Xxxxx X. Xxxxxxx
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||
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(a
Member, per Recital V)
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||
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XXXXXXX
XXXXXXX:
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||
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/s/
Xxxxxxx Xxxxxxx
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||
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(a
Member, per Recital V)
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